The PSA prepayment model is a prepayment scale developed by the Public Securities Association in 1985 for analyzing American mortgage-backed securities.
From the 30th month onward, the model assumes an annualized prepayment rate of 6% of the remaining balance.
[2] Each monthly prepayment is assumed to represent full payoff of individual loans, rather than a partial prepayment that leaves a loan with a reduced principal balance.
Variations of the model are expressed in percent, e.g., "150% PSA" means a monthly increase of 0.3% in the annualized prepayment rate, until the peak of 9% is reached after 30 months.
1667% PSA is roughly equivalent to 100% prepayment rate in month 30 or later.